Work place pension performance poorly managed

Will_43

I have just received my yearly statement for my work place pension which is run by Aviva. The statement shows that the value of my plan was £30,212 on May 2022.  Over the year to April 2023 I have put in a total of £11,387 no money has been paid out and the charges deducted were £181.00 (0.5%) the value of my pension pot is now £36,047.00 barley £6,000 more than last year even though I paid in almost twice that figure even though the UK's FTSE 100 hit highs around March this year.
I rang Aviva and they tell me that as I am approaching retirement date they have automatically been putting a greater percentage of my funds into Long Gilts and Deposits under its Lifestyle Investment Program which is supposed to be a much safer investment fund. This in their words is to minimize the risk from stock market fluctuations as you approach retirement. After complaining to them they sent me information as to the performance of this  Lifestyle Investment Program which has been preforming badly for the last three years at least, however they continue to throw money into it knowing how bad it is performing. They also sent me a list of reasons why the fund is performing badly, increase in t the bank of England interest rates Quantitive easing, the Covid pandemic and so on. but failed to send me a specific warning or this information during the last three years were it has been performing badly. 
I read today that the Guardian wrote a piece on this recently and this is a similar picture for thousands of those hoping to retire this year / next year. Aviva believe that they have done nothing wrong and now that I have been given direct access to my account with them I see that the future prediction is that if I do nothing and continue to pay a similar amount into my pension this year my pot next year will only grow to approx £38,000 another loss of around £9000.
Please help/advise I am at my wits end at this rate I will need to work until I am in my early 70's before I can afford to retire.
Should'nt the Parliamentary Under secretary of State for Pensions, whose responsibilities include private and occupational pensions look into this and a compensation scheme be put in place for those about to retire?

El_Torro

The important thing to remember is that you are responsible for the funds in your pension, not Aviva. 

You may not remember making the choice, when you started paying in you probably just chose the default option.

Dazed_and_C0nfused

I rang Aviva and they tell me that as I am approaching retirement date they have automatically been putting a greater percentage of my funds into Long Gilts and Deposits under its Lifestyle Investment Program which is supposed to be a much safer investment fund.

Are you saying they have done this without following whatever investment choices you made when opening this pension?

Will_43

El-Torro You are correct the fund was organized by my employer and the default of that fund is to do this as you approach retirement. 

dunstonh

I paid in almost twice that figure even though the UK's FTSE 100 hit highs around March this year.

The FTSE100 was the only major index to be in profit in 2022 and it was only barely so.  However, are you invested in a FTSE100 tracker?   - Your post suggests not.

After complaining to them they sent me information as to the performance of this  Lifestyle Investment Program which has been preforming badly for the last three years at least, however they continue to throw money into it knowing how bad it is performing. 

Unlikely to be three years.  Gilts didn't start falling until Nov 2021.  

Aviva believe that they have done nothing wrong 

They haven't.  
a) they are not responsible for the markets
b) they are just following your instructions

and now that I have been given direct access to my account with them I see that the future prediction is that if I do nothing and continue to pay a similar amount into my pension this year my pot next year will only grow to approx £38,000 another loss of around £9000.

Aviva do not issue predictions.  They issue projections but they are not predictions and you should not think they are.
Projections are synthetic using made up figures.  They are artificially pessimistic and reduced to give a real terms value. Not a future money value.  So, you are misreading them.

Please help/advise I am at my wits end at this rate I will need to work until I am in my early 70's before I can afford to retire.

You dont say how old your are but your pension fund value is about the size someone in their mid to late 30s would have.   So, if thats you, then you have plenty of time.  However, you also said they have started to reduce investment risk, which would suggest you are in your late 50s, early 60s.  So, not so good.

Should'nt the Parliamentary Under secretary of State for Pensions, whose responsibilities include private and occupational pensions look into this and a compensation scheme be put in place for those about to retire?

That would be a bizarre use of taxpayers money.  Short term losses should never receive compensation.

2022 was a negative year.  Its not the first.  it wont be the last.      You are overreacting to a negative year.  Something that typically occurs around 1 in 5 years on average.         Thank goodness you didnt look at your investment values over 20 years ago.   2000,2001 and 2003 was three negative years in a row (followed by 5 very strong positive years, followed by a negative year, followed by 12 strong years (with some negative periods but not that lasted long).

If people were paid compensation every time there was a negative year, would they have to pay it back in all the positive years?

booneruk

Will_43 said:

El-Torro You are correct the fund was organized by my employer and the default of that fund is to do this as you approach retirement. 

My workplace use Aviva for my pension too. When I was first signed up I was sent lots of documentation about the default plan I was in, and told that I could change that and choose my own funds - which I did. Easy-peasy.

The default plan I was on was also "Lifestyling" (as it is known) where your investments get moved into bonds the closer you get to retirement. These plans were really designed for the pre-pensions freedoms world where everyone had to buy an annuity on retirement. 

Will_43

I would also like to add that as the work place pension is one of many benefits that employees are entitled to when they join my company  and you are automatically enrolled into and you have jump through hoops to unenroll the explanation of how it sets up is that the company will match what you put in up to 5% and that is it. You are then given access to a company site to mange your benefits (the pension being one of them) and there is an window of opportunity to adjust what you want to pay in once a month and a calculator which is supposed to be linked to your Aviva that predicts what your like monthly income will be at the retirement age you select. However as I found out recently the connection appears to be broken as you can alter the amount you pay into it as a percentage of your salary but it is still stating that I am on target for the income I want in retirement.
Having asked HR I am told that the company reviews the pension scheme every 3 years although the outcome is never passed onto the employees.

Will_43

Hi Dazed and confused, apparently this is how the pension is set up unless you ask Aviva to change it (not well explained in the multitude of documentation you get as a new starter. 

Will_43

Dunstonh thank you for your explanation and in answer to your question regarding age I was 66 this month, I have only been in this work place pension since 2015 hence the size of the pot. Although I would like to add that in 2019 - 2021 my fund vale fell around 1£1500 and taking a longer term view though it would recover easily. Then in 2021 - 2022 if fell again by around £2500 I phoned Aviva then as they thought I was retiring that year and spoke to them they did not inform me that the fund was likely to continue to perform badly and as I intended to work on at least two more years I naively thought it would recover. I was not asked if i wanted to change funds or suggested that I should think about changing funds to improve my investment.

dunstonh

r and spoke to them they did not inform me that the fund was likely to continue to perform badly and as I intended to work on at least two more years I naively thought it would recover.

They would not be able to tell you that:
1 - they do not hold the regulatory permissions to discuss such things with you (advice and opinion are regulated)
2 - they have no crystal ball.
3 - If they had used a crystal ball and guessed, they would have got it wrong.

In July 2022, analysts and economists were saying that it was a good time to get back into gilts due to the falls that had occured.    They were wrong.  Not because they are rubbish but because it's always unknown or unexpected events and data that cause the markets to move more sharply in one direction or the other. 

 I was not asked if i wanted to change funds or suggested that I should think about changing funds to improve my investment.

They cannot suggest that you have alternative funds as that would be advice and they are not advisers.  They take their instruction from you or your adviser.

Everyone is down over 2022.   It isn't the fault of the pension provider or the fund houses.   It was global events and issues that caused 2022 to be a negative year.  The lower the risk (in terms of volatility) that you were, the greater your loss was.  That is unusual, as the normal scenario is that higher risk does worse in negative periods but it was reversed in 2022.

 Although I would like to add that in 2019 - 2021 my fund vale fell around 1£1500 and taking a longer term view though it would recover easily.

2019, 2020 and 2021 were all positive years.    There was a large drop between Feb 2020 and March 2020 but that recovered by late summer.   In any short term period in any year, you will get ups and downs.     For example, whilst 2022 was a negative year, 2023 has been up and down each month without really going anywhere.  You would be pretty much wavy line  (value up/value down) either side of your January value.  The last week hasn't been good but are still higher (just) than the low point in October 2022.

Albermarle

The statement shows that the value of my plan was £30,212 on May 2022.  Over the year to April 2023 I have put in a total of £11,387 no money has been paid out and the charges deducted were £181.00 (0.5%) the value of my pension pot is now £36,047.00 barley £6,000 more than last year even though I paid in almost twice that figure even though the UK's FTSE 100 hit highs around March this year.

I am not in a  Lifestyle fund and I have actively picked my own investments. However my pension pot ( like nearly everybody else) is still down in the last 18 months. So it has not been a great period for many kinds of investments.

However lifestyling funds that move into ( usually safer)  higher % of bonds/gilts, have done worse than average as bonds/gilts have gone through a bit of a nightmare period ( which only happens very occasionally, so you have been a bit unfortunate)

It might not help but there have been numerous other similar posts on the forum in recent months.